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Hundreds and thousands

Shopkeepers should make a note to regularly visit the supermarket dotcom stores and check prices.

Supermarket groups raise and lower so many prices that shoppers are left confused, analysis by The Guardian last week suggests. Former competition watchdog head John Bridgeman claimed this could add £15 to a £100 shopping basket. The stores studied said most of the increases were because promotions came to an end.

For local shops, it is the sheer scale of price volatility that will be the major challenge. The study, for a three week period ending 22 December, saw Tesco increase prices on more than 1,500 shop keeping units (SKUs) and lower them on more than 2,600. At Asda, 2,000 went up. (A separate study by Paul Dobson of Loughborough University has found the most common price cut is 1p.)

The newspaper notes that Asda increased the price of four Duracell AA batteries by 103% to £2.98, up from £1.47. Local shops would find it difficult to buy this pack for much under £2 and are being told to sell at £3.99 [£3.49 in Tesco today, £3.98 in Asda (or two for £4 guaranteed until the end of December]).

From this you can be sure that these surveys are not going to show that the supermarkets are more expensive than your shop. The thrust of the supermarket's marketing that they are always cutting prices might be countered by the fact that they are always raising prices.

A strategy for local shops would be to find a product area where you can compete - avoid batteries - and market the value you are offering on these to your shoppers. Plus nudge up your other prices with the supermarkets to build profit.

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